India’s cryptocurrency sector is undergoing a decisive transformation as regulators intensify efforts to curb illicit financial activity and bring digital asset platforms firmly under the country’s anti-money-laundering framework. During the 2024–25 fiscal year, 49 cryptocurrency exchanges registered with the Financial Intelligence Unit of India (FIU-IND), marking one of the most consequential compliance moves in the history of India’s crypto market.
The registrations reflect the government’s determination to integrate crypto trading into the formal financial system while addressing concerns over fraud, terror financing, and the misuse of digital assets for illegal purposes. What was once a loosely regulated ecosystem is now being reshaped by rules that mirror those applied to banks and traditional financial intermediaries.
India’s regulatory shift gained momentum when crypto assets were officially classified as Virtual Digital Assets (VDAs) and crypto platforms were designated as VDA Service Providers. This classification placed exchanges under the scope of the Prevention of Money Laundering Act (PMLA), legally obligating them to follow stringent compliance standards.
As reporting entities, registered exchanges must now conduct enhanced due diligence on users, monitor transactions in real time, and submit detailed reports to the FIU when suspicious activity is detected. These responsibilities extend beyond basic KYC procedures and include identifying beneficial ownership, monitoring high-risk wallets, and tracking transfers between custodial and non-custodial wallets.
This shift represents a fundamental change in how crypto operates in India. The FIU is no longer treating digital assets as a niche technology but as a financial system that carries systemic risk if left unchecked.
Of the 49 exchanges registered during the fiscal year, 45 are domestic platforms, while four are offshore entities that cater to Indian users. The inclusion of foreign exchanges highlights India’s growing regulatory reach and signals that geographic location alone will not exempt platforms from compliance if they operate in or target the Indian market.
For exchanges, registration has become less of a choice and more of a prerequisite for survival. Platforms that fail to comply risk penalties, operational restrictions, or outright exclusion from the Indian ecosystem. At the same time, registered exchanges gain a degree of regulatory legitimacy that may help restore investor confidence after years of uncertainty.
Data collected through suspicious transaction reports submitted by registered exchanges paints a revealing picture of how crypto has been misused in recent years. Regulators flagged multiple categories of high-risk activity, including online scams, fraudulent investment schemes, peer-to-peer manipulation, and transactions linked to illegal gambling operations.
More troubling were reports tied to dark-web activity and other severe criminal offenses. These findings reinforced the government’s position that crypto platforms, if left unregulated, can become conduits for serious financial crimes.
The FIU’s growing database of crypto transaction intelligence is expected to play a central role in future investigations, enabling authorities to trace funds across wallets and platforms with greater precision than ever before.
India’s AML push is not merely symbolic. During the same fiscal year, authorities imposed financial penalties totaling ₹28 crore on exchanges that failed to meet compliance standards. These fines sent a clear message that regulatory obligations are enforceable and non-negotiable.
In parallel, enforcement actions extended to offshore platforms operating without proper registration. Notices were issued to multiple foreign exchanges, warning them to either comply with Indian AML rules or cease serving Indian customers. This approach underscores India’s intent to assert regulatory control over all crypto activity connected to its financial system.
For users, the tightening regulatory environment brings both benefits and challenges. On one hand, stricter compliance reduces the risk of fraud, improves platform accountability, and aligns crypto trading more closely with established financial norms. On the other, enhanced KYC requirements have made onboarding more demanding.
Users are now required to complete advanced identity verification steps, including biometric authentication and location validation. While these measures strengthen security, they also reduce the anonymity that once defined crypto trading, prompting debates about privacy and accessibility.
Despite these concerns, many industry observers believe that regulatory clarity may ultimately encourage broader adoption, particularly among institutional investors who previously avoided the Indian crypto market due to legal ambiguity.
India’s approach mirrors a broader global trend toward tighter oversight of digital assets. Regulators worldwide are increasingly viewing crypto exchanges through the same lens as banks and payment providers, especially when it comes to money laundering and terrorist financing risks.
By centralizing oversight through the FIU, India has opted for a streamlined enforcement model. This structure reduces overlap between agencies but also places significant responsibility on a single authority to balance innovation with risk control.
The registration of 49 crypto exchanges with the FIU marks only the beginning of India’s regulatory evolution. As compliance systems mature, further rules governing custody, taxation, and consumer protection are expected to follow. Exchanges that adapt quickly may benefit from increased legitimacy, while those that resist change risk being sidelined.
For the crypto industry in India, the message is unmistakable: regulatory integration is no longer optional. Digital assets are being absorbed into the country’s financial oversight framework, and the future of crypto trading will be shaped not by regulatory avoidance, but by compliance, transparency, and accountability.